Coinspeaker
What Are Crypto Cards and How Do They Work?
More and more people are turning to cryptocurrency for reasons other than investment. One of them is domestic spending for everyday items and other bigger purchases. This has given rise to crypto cards, with dozens of their types flooding the market and being backed by multinational companies both within and outside of the space.
But what are crypto cards in the first place? Are they worth using and which ones should you get? As this topic becomes even more relevant to the average crypto holder, we will discuss the details in this guide.
Crypto Cards Defined
First, it is worth explaining what crypto cards are. Crypto cards are payment cards associated with one or more financial institutions that let consumers spend their cryptocurrency, or the fiat equivalent with merchants. These crypto cards operate in a similar way to traditional bank cards and can come with various benefits. Some of them, for example, come with perks for users and can even give cashback rewards. And as they become more popular, these perks only seem to get better.
But not all crypto cards are the same and there are tangible differences between the two major types of crypto cards: credit crypto cards and debit crypto cards.
Crypto Credit Cards
Crypto credit cards are payment cards that allow their users to spend their fiat currency as they normally would, along with monthly limits on how much they can borrow from the card issuer. The major difference between them and your usual credit cards is that they allow users to earn cryptocurrency while they make their purchases. This is usually done through a cashback program or by earning points, and customers can typically choose what crypto they want to earn cashback for.
To get a crypto credit card, a user has to apply to a financial institution that offers these cards to users. Just like with a traditional credit card, the institution will conduct a credit check on them and they might be approved or denied based on this. If they are approved, they can use their card to make purchases and will either earn crypto cashback or points based on their activities. Cashbacks tend to be between 1.5% and 3% of the purchase value.
Among the benefits offered by crypto credit cards are users’ ability to earn cryptocurrency or points for their spending, free upgrades at certain businesses, and access to a line of credit by using these cards.
However, some crypto credit cards have limits on how much you can earn in cashback and points. And of course, these credit cards may not be as widely accepted as traditional credit cards.
Crypto Credit Cards: Examples
The crypto market is full of credit cards for users to apply to. While this is not exhaustive, here are some of the notable examples:
- Venmo credit card. This popular payment processor allows its users to earn cashback from their credit card purchases and then use this cash to buy cryptocurrency. Users can buy Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), or Bitcoin Cash (BCH), and there is a transaction cost. There is also the option to auto-buy these cryptos, meaning cashback is automatically spent buying crypto. Its annual percentage rate (APR) is between 15.24% and 24.24%.
- Gemini credit card. This crypto exchange has offered credit cards since 2021, and they come with a cashback of between 1% and 3% depending on the category. These rewards are accrued automatically, so there is no need to do anything other than spend. There are also over 50 cryptos you can spend your rewards on, and these are available through the Gemini dashboard. It has an APR of between 17.24% and 29.24%.
- Brex credit card. This card gives up to 4% cash back on purchases and as an introductory offer, gives customers 10,000 points for the first $3,000 in purchases within the first 3 months. Rewards with this card can be paid out in over 60 cryptos, including Bitcoin and Ethereum. It attracts an APR of between 17.24% and 29.24%.
- Nexo credit card. This card is unique in that to get it, you have to deposit some of your cryptos and then apply for a loan from Nexo. If you’re approved, you get a MasterCard credit card that you can use to spend and earn crypto rewards. The rewards are given only in Nexo’s native token or crypto and its APR is from 0% to 13.9%. Its current cashback rate is Up to 2% for NEXO and 0.5% for BTC.
Crypto Debit Cards
Crypto debit cards are another type of crypto card you can opt for and they work quite similarly to traditional debit cards. They are linked to an account that has your cryptocurrency and when you make a payment, the equivalent is deducted from this account. Unlike a crypto debit card, you don’t get a line of credit with this card and can only spend the crypto that you have on hand.
To get a crypto debit card, you have to open an account with an exchange or any other institution that issues them. Then, you need to fund your account with the cryptos that they support and apply for your debit card. The platform will not need to run a credit check on you to issue you this card and once you have it, you can begin spending at various merchants.
Notably, some crypto debit cards give you cashback and other rewards for your purchases. Besides, owning a crypto debit card means being able to spend crypto as easily as you would in fiat currency. If the card is used by a widely-accepted processor like MasterCard, you can spend your crypto almost anywhere.
However, some crypto debit cards require you to stake your tokens with the platform before you can access your debit card. Coming without a line of credit also causes inconveniences for a user.
Crypto Debit Cards: Examples
Some of the examples of crypto debit cards on the market include:
- Coinbase debit card. This card was developed in conjunction with Visa Inc (NYSE: V) and can be used at millions of merchants and ATMs around the world. Dozens of cryptos are supported, including Bitcoin and Ether, and customers can choose within the app which crypto they want to spend. There are no annual fees or transaction fees for using this card, though ATM withdrawals are limited to $1,000 per day. Some cryptos also attract cashback and rewards on purchases.
- Crypto.com debit card. Crypto.com has one of the most extensive selections of crypto debit cards on the market, ranging from the basic card to its VIP selections. These cards let users spend their crypto and withdraw between $200 to $1,000 fee-free from ATMs each month. Some of its higher-tiered cards even reimburse users’ entertainment subscriptions and give access to exclusive airport lounges. To get the higher-tiered prepaid card, you’ll have to lock up a certain amount of crypto within your account but all tiers can manage their accounts from within the app.
- BitPay debit card: This card is funded through the BitPay app or a Coinbase wallet and can be used online and in-store. From merchant payments to ATM withdrawals, the BitPay card supports over a dozen cryptos like Bitcoin, Ethereum, and Dogecoin, though there are plans to add more tokens to the roster. Payments made at certain participating retailers attract cashback and these are automatically added to the users’ wallets. The BitPay debit card is powered by MasterCard and is one of the most popular in the market.
Is It Worth to Get a Crypto Card?
A crypto card can be very much worth it for the benefits it brings. If you want to spend your cryptocurrency on a day-to-day basis, they can be a very convenient way to do so, while still getting cashback for your efforts. On top of this, many of the examples we’ve highlighted give you additional perks like access to airport lounges and reimbursement for your subscriptions. And in the case of a crypto credit card, you can get a line of credit for your troubles.
If these perks appeal to you, then a crypto card would be very much worth it.
Conclusion
Crypto cards have become immensely popular in the industry and more options seem to spring up each year. They allow crypto users to spend the tokens they already have and even access credit in some cases. Beyond allowing users to spend their cryptocurrency as easily as they would fiat currency, many come with cashback offerings and perks that rival even the best traditional bank cards. Needless to say, they offer a lot of benefits for users and should continue to be popular in the crypto industry for years to come.
